New Market Tax Credits Key to City’s Revival

Cincinnati’s development coffers got a little fatter last week, as $125 million in federal tax subsidies flooded into the city. These subsidies, called New Market Tax Credits (NMTCs), incentivize local investors to funnel capital into low-income communities and have essentially bankrolled Over-the-Rhine’s entire revitalization.

For example, Washington Park — perhaps the most emblematic example of OTR’s rebirth — received nearly $14 million in New Market Tax Credits (NMTC) from the Local Initiatives Support Coalition (LISC) to help support its reconstruction. Several ongoing developments have also received some or all of their funding through NMTCs, including the Market Square and Ziegler Park projects.

Ziegler Park Aerial

New Market Tax Credits helped transform parts of Over-the-Rhine like the reconstruction of Ziegler Park (Photo by Travis Estell)

Developers often balk at the prospect of developing low-income communities because they fear their investment will be wasted. NMTC are the federal government’s attempts to allay these concerns. Congress first authorized the subsidies through the Community Renewal Tax Relief Act of 2000. Over the past fifteen years, the bill’s success has earned it bipartisan support. According to the program’s 2016 report, the tax credits have created 750,000 jobs and invested over $75 billion to businesses and revitalization projects in communities with high rates of poverty and unemployment.

Less than 25 percent of the applications submitted each year are awarded, but three major Cincinnati developers beat the odds this year: Cincinnati Development Fund ($65 million), Uptown Consortium (45 million), and the Kroger Community Development Entity ($15 million).

To win an NMTC grant, a corporation — in federal parlance, Community Development Entities (CDE) — must lobby the U.S. Treasury’s Community Development Financial Institution (CDFI) Fund on behalf of private investors like the Cincinnati Center City Development Corporation (3CDC). If the CDFI approves the application, then the investors who pledged money to the CDE will receive a seven-year tax abatement to support development.

3CDC, in particular, has secured a eye-popping $238 million since the program’s inception. Without this capital, it’s unlikely that OTR would have changed as drastically as it has. The community was a no-brainer for NMTC-driven development due to its extreme poverty. The neighborhood’s median household income during the 2010 census was a paltry $14,517. Six years and billions of dollars have certainly improved its lot, but its average income still pales in comparison to the city’s 2015 median income, $56,826.

While OTR will likely continue to receive the majority of NMTC-driven development, other distressed neighborhoods are receiving attention. According to Director of Development Thea Munchel, the Walnut Hills Redevelopment Foundation expects approximately $6.5 million in NMTC Equity for its expected revitalization of Paramount Square. “It is too early to know who all will participate in the deal,” she said. “But Cincinnati Development Fund received a huge award and has indicated that they will contribute some into the project.”

UC Explains Concept Behind $16 Million Renovation of Historic Sears Building

The $16 million transformation of a 1929 department store into a research and innovation center for the University of Cincinnati is well underway in Avondale.

“The building is designed for space for work between outside companies and the university. There will likely be offices, labs, and open work areas. The interior has opportunities for collaborative areas, and open areas with flexible work space layout,” said University Architect Mary Beth McGrew.

UrbanCincy reported in January 2014 that UC intended to demolish the building, which is located at 2900 Reading Road and was originally built as a Sears, Roebuck and Co. department store. However, the university later decided to preserve the structure, seeing the potential for this renovation to spur new development in the surrounding area.

“It is to be hoped the renovation of the building owned by the university will entice others to develop in the nearby lots. This building might indeed be a catalyst,” added McGrew.

Technically a renovation project, it hardly meets the definition of being one that focuses on historic preservation. In fact, many UrbanCincy readers who have seen the renovation in progress have been curious about the extent to which the original building would be preserved.

While the core of the original 1929 structure is being saved, the 1945 addition has already been demolished. Additionally, much of the brick exterior of the original 1929 building has also been removed. The prominent brick tower on the structure, while being saved, is also being obscured by the addition of a fourth floor.

McGrew explained to UrbanCincy that brick on the tower will be preserved and replaced, where the brick had been damaged, by recovered brick from elsewhere on the structure. Aside from the tower and some accent areas, the rest of the structure will be clad in modern glass treatment.

“The brick was supported in large part by steel angles that were in very bad shape,” McGrew said. “The new façade material will be a brick of similar color and size.”

PHOTOS: Building Boom Changing the Face of Uptown Neighborhoods

While the construction activities taking place in Over-the-Rhine and Downtown often grab the most headlines, it is actually the city’s uptown neighborhoods where some of the most dramatic construction progress is taking place.

Numerous projects are underway that are adding four- to six-story structures all over Clifton Heights, Corryville, University Heights, Clifton, and Mt. Auburn.

The $15 million, 115-room Fairfield Inn & Suites is now topped out and filling in the remaining piece of the U Square at The Loop block along W. McMillan Street. Once this portion of the development is complete, attention will turn to developing the planned office building along Jefferson Avenue in between W. McMillan Street and Calhoun Street.

Just down the street from the hotel project site is The Verge – 178-unit residential development – which is also now topped out. This project has stirred controversy due to its demolition of two historic structures that were once on the site. In addition to that, the project is replacing a large surface parking lot and several small homes.

In Corryville, the finishing touches are being put on the $30 million, 147-unit VP3 residential development that, like The Verge, is targeting students studying at the University of Cincinnati. Likewise, the $25 million 101 E. Corry project is bringing an additional 123 apartments and eight townhomes to the historic neighborhood.

Nearby, and on the border of Clifton Heights and Corryville, is the University Plaza site, which has now been fully demolished of its previous structures. While the new development footprint will not differ significantly from what was there before, a new Walgreens is already nearing completion, and a new Kroger grocery store, twice the size of the previous store, will also soon begin construction as part of a $24 million redevelopment effort.

Finally, the $17 million, 117-unit Gaslight Manor residential development in Clifton is on-pace to be completed later this year. This project is replacing a less dense apartment complex that previously occupied the hilly site immediately northwest of Good Samaritan Hospital.

EDITORIAL NOTE: All 17 photographs were taken by Eric Anspach in February 2016.

Success of Hickory Place Townhomes Accentuates Avondale’s Turnaround

A long-held vision for bringing new market rate housing to Avondale is finally being realized; and its early success has surprised many. With most of the initial eight Hickory Place Townhomes already sold, developers say they are ready to invest in a second phase.

“We knew the townhomes in phase one would sell quickly, but sales outpaced our expectations,” said Beth Robinson, president and CEO of the Uptown Consortium.

Robinson says that the first five homes were sold in just 16 days, which is well ahead of the 51-day average for homes on the market in the Cincinnati area. Those first five homes, she says, also had listing prices above $175,000.

When community leaders and development officials with the Uptown Consortium broke ground on eight townhomes in early 2014, many were skeptical about whether they homes would sell.

The skepticism was easy to understand.

The site is located in the middle of a redevelopment area that has yet to be fully realized, is situated in a neighborhood that is often defined by crime and poverty, and is also located near many foreclosed or abandoned homes. But knowing the challenges of the site and project only offers a partial understanding.

The site is located just off of Burnet Avenue, which has seen tens of millions in new investment over the past decade. These investments have created new businesses and jobs, while also preserving some long-time neighborhood establishments and historic assets. Meanwhile, the nearby Cincinnati Children’s Hospital Medical Center has continued to add hundreds of high-paying medical and research jobs to its growing campus, and the nearby playground and ball field was recently freshened up thanks to an investment from the Reds Community Fund.

These new investments, combined with changing demographics more interested in urban living and working options, have set the table for a new path forward for the city’s seventh most populated neighborhood.

“We are thrilled that the market has responded so favorably to the Hickory Place Townhomes,” said Ozie Davis, executive director at Avondale Comprehensive Development Corporation. “The success of this project proves our strong belief that Avondale is the next hot residential market.”

Similar to what has been completed thus far, the $5 million second phase will include eight townhomes with approximately 1,400 square feet of living space, and including two to three bedrooms. In order to maximize the use of the land, developers are only building one-car garages for each home, but they will come with the option of an additional on-street parking space along Northern Avenue.

Listing agents with Coldwell Banker’s Metro Link office say that the prices for these homes will start at $225,000.

Developing homes in this price range within Avondale is intentional. In addition to being the largest black community in the city, Avondale is also one of the city’s poorest. This has led to numerous problems over the years, including schooling options, lack of healthy food options, crime and abandonment.

While neighborhood leaders have shown a strong commitment to bolstering affordable housing options, and improving existing conditions of the neighborhood for longstanding residents, the diversification of income levels and housing options is seen as a positive.

If recent success stories, such as the $40 million Avondale Town Center development on Reading Road, and the massive capital investment to improve low-income housing options, are any indication, then the future of the neighborhood looks as bright and as hopeful as the vision Davis has for it.

Uptown Neighborhoods Have Outsized Role in Regional Economy

Data released by the UC Economic Center shows that Cincinnati’s uptown neighborhoods – Avondale, Clifton, Corryville, Clifton Heights, Fairview, University Heights, and Mt. Auburn – contribute heavily to the regional economy.

Commissioned by the Uptown Consortium, a non-profit dedicated to development in the area, the collection of neighborhoods actually have an outsized influence on the regional economy.

According to the study, uptown houses more than 800 businesses that collectively employ around 52,000 employees and contribute more than $3 billion in annual wages in the Cincinnati Metropolitan Statistical Area. For the City of Cincinnati, the area represents 18.2% of all income tax collections taken in by City Hall.

These statistics are buoyed by the fact that the area also has one of the fastest growing job rates in the region. From 2012 to 2013, uptown neighborhoods saw employment rise by 12%, while growth throughout the rest of the city stood at 0.2%, and the rest of Hamilton County at 0.7%. All of this growth has led to a building boom that is changing uptown’s image.

Furthermore, the UC Economic Center found that while average city-wide property taxes collected per acre held averaged $8,000, while in the uptown area that figure stood at an average of $14,000 per acre.

This economic impact is driven mostly by what the report refers to as anchor institutions – education, healthcare, and social assistance agencies. These types of employers make up a large portion of the city economy, but particularly so uptown. Overall, these types of employees make up 16.3% of the city’s total workforce, and contribute around $98 million in city income taxes and $17 million in Hamilton County sales taxes annually.

All told, they account for 7.8% of the Cincinnati MSA’s gross regional product.

The report also demonstrates that, in addition to the direct economic impact of anchor institutions, they also draw considerable indirect impact from the money injected into the local economy.

While the institution and what are referred to as their auxiliary businesses are a boon for the regional economy at the moment, an over reliance on them could be dangerous.

As the Economic Center stated, “were the University of Cincinnati to close, much of the economic activity in Uptown would leave the region.”